Sai Kiran Clearing Co. Pvt. Ltd. v. The Deputy Commissioner of Income Tax

1. Heard learned Counsel for the parties.

2. Rule. The rule is made returnable forthwith. By consent, the Petition is taken up for final hearing.

3. The Petitioner challenges the impugned reassessment Order dated 30.03.2022. Learned Counsel fairly states that an Appeal is already instituted against the impugned re-assessment Order dated 30.03.2022 after disclosing that this Petition has been filed and offering to withdraw such Appeal depending on the outcome of this Petition.

4. Mr. Bhat learned Counsel for the Petitioner submits that this is a case of gross and apparent violation of principles of natural justice, and that is why this Court may consider entertaining this Petition even though the Petitioner has already invoked the alternate statutory remedy of appeal. He points out that the Petitioner was issued a Show Cause Notice dated 29.03.2022, inviting a response by 23.59 hours of 30.03.2022. He submits that even though this time was insufficient, the Petitioner filed a response on 30.03.2022 at 17.59 hours. However, the second Respondent passed the impugned Order at 17.22 hours of 30.03.2022 without waiting for the reply. He submits that this is a case where the Petitioner’s response, even though filed within the prescribed time, was entirely ignored and the impugned reassessment Order was made. Mr. Bhatt submits that this is a clear case of violation of natural justice and therefore constitutes one of the exceptions to the rule of exhaustion of alternate remedies.

5. Mr. Mohanty learned Counsel for the Respondents submits that the reassessment had to be completed by 31.03.2022. He pointed out that the Petitioner acquiesced in the Section 148 proceedings. In any event, he submitted that if the matter has to go back to the assessing officer, appropriate directions be issued for disposal within the timeline to be indicated by this Court, so that no limitation issues are raised.

6. We have considered the rival contentions and are satisfied that this Petition can be entertained despite the Petitioner invoking the alternate statutory remedy of appeal. This is because the undisputed facts indicate a clear violation of the principles of natural justice and fair play. This is one of the circumstances in which the rule of exhaustion of alternate remedies can be departed from.

7. The Petitioner was issued a Show Cause Notice and granted time to file a response by 23.59 hours of 30.03.2022. Such a response was filed by the Petitioner at 17.59 hours on 30.03.2022. Even before the time limit indicated in the Show Cause Notice would expire, the second Respondent made the impugned reassessment Order dated 30.03.2022 at 17.22 hours. Thus, the Petitioner’s response filed within the timeline indicated was not even considered. Such non-consideration vitiates the impugned Order and violates the principles of natural justice.

8. Mr. Bhatt has relied on the Judgment of this Court in the case of Mateen Pyarali Dholakia vs. Union of India and others in

W. P. No. 1286 of 2021 dated 11.10.2021 in support of his arguments. In the said case as well, the Co-ordinate Division Bench interfered with the impugned assessment Order because the same was passed even before the time granted for filing a reply could expire and without considering the reply filed by the assessee. The reasoning behind the decision will also apply to the facts of the present case.

9. On the above short ground, we set aside the impugned reassessment Order dated 30.03.2022 and remit the matter back to the assessing officer for considering the Petitioner’s response for granting the Petitioner a personal hearing and making a fresh reassessment Order on its own merits and in accordance with law. This entire exercise must be completed within three months of the uploading of this order.

10. Mr. Bhatt’s statement that the Appeal against the impugned re-assessment Order dated 30.03.2022, which we now quash, will be withdrawn within 15 days of the uploading of this Order is accepted, and the Petitioner must comply with the same.

11. Mr. Bhat states that no objection based on limitation would be raised provided the fresh reassessment Order is made within three months of uploading this order. Besides, Mr. Bhatt states that the Petitioner will render full co-operation and not seek any unnecessary adjournments at the stage of personal hearing. All these statements are accepted.

12. All contentions on the merits of the reassessment are left open. If the assessment Order aggrieves the Petitioner, then the Petitioner is granted liberty to raise all contentions, including contentions raised in this Petition regarding the validity of reopening of assessment in the Appeal that the Petitioner may choose to institute against such re-assessment Order.

13. The rule is made absolute in the above terms without any costs order. The Petition stands disposed of.

14. All concerned are to act on an authenticated copy of this Order. (JITENDRA JAIN, J.) (M. S. SONAK, J.)